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Mom and Pop Investors Are Behind This Historic Market Rally

You can thank the little guy for Dow 20,000.

That’s the takeaway from data tracking money flows into and out of stocks, according to an analysis by JPMorgan Chase & Co.

The telltale sign retail investors are behind the longest string of U.S. stock highs in decades? An $83 billion surge of cash into passive strategies so far this year amid a $15 billion withdrawal from actively managed funds. That’s on top of evidence that institutional traders have backed away, the bank says.

“Investors are normalizing their equity fund buying; this is a return to normal,” Nikolaos Panigirtzoglou, global market strategist at the U.S. bank, said in a phone interview.

After years of snubbing the asset class in favor of fixed income, retail investors are showing pent-up demand for stocks amid an escalation in risk-taking and projections for economic growth since the November election.

From the $86...